business strategy

Topics: Strategic management, Varig, Airline Pages: 6 (1253 words) Published: May 12, 2014
Foundations of Business Strategy

Final Project – Case Gol Linhas Aéreas

To: Mr. Paulo Sérgio Kakinoff (CEO)
From: DBM Consultants
Subject: GOL Business Plan

GOL Transportes Aéreos is one of the main players in the South American airline industry. The company was founded in 2001 in Brazil, and started based on a low costs strategy. In less than a decade, the company started to gain market share and became the second largest Brazilian airline company in terms of Fleet Size and Market Share. Nowadays the company has 16,119 employees, 115 aircrafts and 900 daily takeoffs during the week.

The main goal with this Business Plan is to seek to strengthen all GOL’s operation, improving its EBITDA, Market Share and Revenue. By this, the goal is to help GOL to expand its operation, and therefore becoming the biggest company in the South American airline industry.

Industry Analysis
The Brazilian airline market has a some very important barriers to entry, such as the necessary high investment to start the company (aircrafts costs, for example), but mainly the route availability, since the Brazilian government limited the daily number of takeoffs and landings at key airports, which inhibits other companies from entry an already consolidated market. In 2001, when GOL was created, the Brazilian airline industry was growing on a base of 2% a year, but in the last few years, had experienced growths of 20% a year. This market used to have only one big player, TAM Airlines, which still is the biggest company in the region, but since 2001 GOL has grown as big true competitor. GOL knew how to get the attention of those new clients, and grew very fast. The difference on strategy on these two companies was very clear, as TAM focused on improving the quality of the services and on maintain its customers, and GOL went for the “low cost, low fare” and technology advance.

TAM and GOL had been controlling around 90% of Brazilian market share, but in the last two years, a different kind of company, mainly Azul and Avianca Brazil, has started to gain market share from the top organizations, by offering a better service (wider seats, live TVs, better snacks) for a similar price. Now, we can see two big and consolidated companies fighting for the market leadership, and two relative new companies starting to gain market share, as demonstrate on Exhibit 1 with the evolution of market share from 2008 to 2013. We are going to focus on those big four companies that lead the Brazilian airline industry and to help that, we are going to present on Exhibit 2 the Competitor Information Spreadsheet with


Foundations of Business Strategy

Final Project – Case Gol Linhas Aéreas

some numbers from 31/12/2012 to help identifying the existing differences between those four companies.
To continue fighting for the post of biggest Brazilian airline company with TAM and avoid the loss of market share by Azul and Avianca, GOL has to make some significant changes on its strategy and by that, has to understand the five competitive forces, the opportunities and threats from the market, and its own strengths and weakness. To help visualizing those things we created the Exhibit 3, with the Brazilian airline five forces analysis and the Exhibit 4 with the SWOT (strengths, weaknesses, opportunities, and threats) analysis. Another important subject that has to be included on the equation of Brazilian airline industry nowadays is the Frequent Flyer program that has been growing over the last few years. As we can see in the Exhibit 5, all the big companies have their own programs, and this is an excellent way to create customer loyalty. Smiles, GOL’s Frequent Flyer program, have already more than 9 million people register and more than 150 partners. Besides that, those programs have started to generate a restriction against companies that does not offer or haven’t a good Frequent Flyer program. We can see big Brazilian companies with internal...

References: Harris, Jared & Lenox, Michael. The Strategist 's Toolkit
Exame Megazine (04/18/2013)
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